New Economic Model (NEM) : An Analytical Perspective Towards Vision 2020
Malaysia has reached a defining moment in its development path. Vision 2020 is not possible without economic, social and government transformation. To move the country forward, the government has crafted a framework comprising four pillars to drive change. The NEM is one of the four important pillars needed to achieve Vision 2020 in the next 10 years, with the three other pillars of the national transformation program being which are 1Malaysia, the Government Transformation Program and the 10th Malaysia Plan.
The goal of the NEM is for Malaysia to be a developed and competitive economy whose people enjoy a high quality of life and a high level of income resulting from growth that is both inclusive and sustainable. The NEM is build on three important principles, first principles is breaking through to high income status with target US$15000-20000 per capita by 2020, secondly is towards sustainability which is meet present needs without compromising future generations and lastly through the principle of inclusiveness which is enables all communities to fully benefit from the wealth of the country. High income is achieved among others via innovation, creativity, higher productivity, new technology and development of multi-skilled and highly skilled workforce. Sustainability will ride upon environmental friendly projects, increased quality of life and high and sustained growth path. Inclusiveness is achieved among others via affirmative action’s and narrowing the income inequalities.
The New Economic Model (NEM) to be achieved through an Economic Transformation Programme (ETP) constitutes a key pillar which will propel Malaysia to being an advanced nation with inclusiveness and sustainability in line with the goals set forth in Vision 2020. The ETP will be driven by eight Strategic Reform Initiatives (SRIs) which will form the basis of the relevant policy measures. The eight Strategic Reform Initiatives (SRIs) consist of re-energising the private sector, developing a quality workforce and reducing dependency on foreign labour, creating a competitive domestic economy, strengthening the public sector, transparent and market friendly affirmative action, building the knowledge base and infrastructure, enhancing the sources of growth, and ensuring sustainability of growth.
Malaysia is still trapped in the “middle-income gap” despite its economic achievements in the past few decades. For the record, Malaysia was one of the 12 countries that registered an average growth rate of 7% or more per annum in the 25 years or more since World War II. Notwithstanding this, Malaysia’s current per capita income is still around US$7,600, half of the US$15,000 needed to be categorized as a high-income country. The deceleration in Malaysia’s economic growth in recent years was attributed to the decline in private investment, a feature that became prominent after the Asian Financial Crisis in 1998 and decline further as a result of the 2008 global crisis. As a result, Malaysia’s growth rate fell to an average of 5.5% between 1999 and 2008, compared with 8.8% between 1990 and 1997. Under the NEM, the Malaysian economy is expected to register an average growth of 6.5% a year from 2011 till 2020. The noble goal of NEM is very much dependent upon the delivery mechanism. However with the formulated 8 Strategic Reform Initiatives and corresponding policy purposes, 12 NKEAs and an estimated of RM1.4 trillion of investment, the NEM is set to push Malaysia to become a high income advanced nation with inclusiveness and sustainability.
According to economist said that Malaysia will likely fail to achieve Vision 2020 as political indecision and global economic uncertainty looks set to hamper economic growth over the next ten years. With average GDP growth in the next ten years projected to be only 6.5% per cent target set by the prime minister from 2011 till 2020...
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